Bad news? Who cares?
This market is a survivor. Keep reading for the evidence.
This Is the Survivor Market
September is historically the worst month of the year for the stock market.
And we've had plenty of tricky news to navigate, including:
- Hot CPI & PPI reports
- The FOMC raising rates and signaling more hikes coming
- The 10-Year Treasury Yield hitting 5%
- OpenAI's Sam Altman and Anthropic's Dario Amodei calling for a slowdown in AI development
- Crude oil hitting $100+ because of ongoing Iran tensions
But all things considered, we're hanging in okay.
The SPX is down 0.7%, while QQQ is up 0.1%. And the leading semiconductors are up, with SMH rising 1.4%.
Technically, the S&P tends to fall an average of 0.6% in September. So we're doing worse than usual.
But falling just -0.7% in the face of all the aforementioned bad news is impressive.
This market is a survivor.
And it may be thanks to all this bullish AI news:
We May Have a New AI Superstar
The market got a short-term spook Monday when OpenAI's Sam Altman and Anthropic's Dario Amodei called for a slowdown in AI development.
But we keep seeing more and more signs of staggering demand for AI infrastructure.
This week, networking equipment maker Ciena (CIEN) announced it expects 30% compounded annual revenue growth through 2029.
Power infrastructure name Forgent Power Solutions (FPS) skyrocketed this week after a monster earnings report thanks to data center demand.
By the way, FPS is a clear candidate to be the next AI superstar. It's growing like mad, dropped gigantic guidance, and it's still 40% off the highs:
Meanwhile, neoclouds CoreWeave (CRWV) and Nebius (NBIS) both implemented price increase for compute capacity.
And Nvidia's Jensen Huang said the company will double chip sales next year.
The good times just keep on rolling.
And that's helping hold up the economy and market.
Crypto Is Back on Top
Bitcoin and Ethereum have been a mess this year.
But they've picked up steam, and the Grayscale Ethereum Trust ETF (ETHE) is now 70% off the lows.
And it looks like it may be breakout out of its month-long range.
Sami Abusaad just explained the bull case for ETHE on Wednesday, when it was trading at $19.33.
Sentiment Is Not Bullish
The latest AAII Sentiment Survey shows that just 28.8% of investors are bullish.
This is down from 38.0% last week, and it's well below the long-term average of 37.5%.
Meanwhile, 53.3% of investors are bearish. This is the highest bearish reading since May 1, 2025.
Yes, 2025. Not 2026.
Plus, CNN's Fear & Greed Index is at just 28/100.
Fear & Greed was in the mid-60s in August.
The crowd is not exactly in manic depression mode.
But there is not a lot of joy out there.
The Great Rate Debate Continues
The FOMC raised rates by 25 bps on Wednesday, with Chair Kevin Warsh saying "The plain fact is that inflation is too high and has been for too long."
The CME's FedWatch Tool now shows the market is pricing in a 58% chance of a 25 bps rate hike at the October meeting.
And it's pricing in a 44% chance of a third hike at the December meeting.
This has the 10-Year Treasury yield at just over 5%.
And this is fascinating, because there was a time when people were worried about the 10-year hitting 4.5.
Now we're way past that and the stock market just keeps on chugging along.
Next Week SHOULD Be Quieter
Based on the calendar, you'd think the market should be quiet.
We have no economic data Monday because of the Yom Kippur holiday. And after that, we have some Treasury auctions, Durable Goods, and Michigan Consumer Sentiment.
And Costco (COST) is the lone big earnings report.
However, it feels like anything could happen with Iran, and at some point, higher bond yields will matter.
The Pristine Mentorship Is Open
Sami Abusaad and James Rich Young's Pristine Mentorship is open! (spots are limited)
In this video, they take you through the 4 steps to becoming an elite trader.
